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Abraxis Fires AstraZeneca, Gets Fired Up

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Buoyed by deep pockets filled with cash after it separated from its generic drug business, Abraxis Bioscience (Nasdaq: ABII  ) is moving into the deep end with the big boys. The platform drugmaker decided to end its marketing agreement with AstraZeneca (NYSE: AZN  ) and sell its cancer drug Abraxane by itself.

It'll cost the company $268 million to get out of the partnership, but the timing seems right; Abraxane has been competing well against the other taxanes -- Bristol-Myers Squibb's (NYSE: BMY  ) Taxol and Sanofi-Aventis' (NYSE: SNY  ) Taxotere -- in the metastatic breast cancer market and is poised for growth into other cancers. It also has compounds in its pipeline that could be sold using the same drug delivery technology, so building out now isn't unreasonable.

The agreement still needs to be approved by Abraxis' board, but a thumbs-up seems likely, because if the company stays with AstraZeneca, it will have to start paying a commission of 50% -- more than double the 22% commission that AstraZeneca currently gets.

Abraxis plans to start nine phase 3 trials next year. Seven will support label expansions of Abraxane into other cancer types (and as a first-line therapy for breast cancer) and the other two are for nab-docetaxel, its most advanced pipeline drug. Nab-docetaxel uses the same nab (nanoparticle albumin-bound) technology as Abraxane, which binds albumin to a well-characterized chemotherapy to make it more potent.

I've always liked Abraxis for its relatively low-risk pipeline that could produce decent revenue, but the company always seemed like it was stuck in the mud. This announcement makes me think that it's serious about taking it to the next level. At the very least, investors should keep this one on their watch list.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

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  • Report this Comment On November 26, 2008, at 4:29 PM, pharmajocky wrote:

    This company has been promising clinical development since inception and hasn't progressed passed Metastatic Breast in the four years that it has been approved by the FDA. So they are just now starting 1st line trials after selling a billion in the metastatic market? Something is not right. The nab platform is the valuable asset here, and there is no reason it couldn't be separated from the company after this poison pill of a co-marketing deal is gone.

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